If you are planning to start your investment journey, start now. Veteran investor Warren Buffett also believes in and follows the same principle. If you haven't started investing yet, there is nothing to worry about. Investing is also like reading and learning, which has no age. If you start investing late, make sure to select an investment plan that can help you make up for the wasted time.
Before embarking on the investment journey, two things should always be kept in mind. ROI is the return on time and investment. The longer you invest, the higher the return you will get. You have to make sure that you will accomplish your goals with the least amount of risk. You have to plan to keep in mind the amount that you want to earn through investment in the future. Here Vikas Singhania, CEO, TradeSmart, shares some great math tips that will make things a lot clearer and easier for you.
50-20-30 Rule
This rule is as clear as its numbers. You have to divide your money into three parts. After-tax, 50% of the salary will have to be kept for household expenses. 20% will have to be kept for short-term needs and 30% will have to be kept for future needs.
15-15-15 Rule
This rule is for those who believe in long-term investment. In this, 15 thousand rupees have to be invested every month for 15 years in such an asset, which gives a return of 15% annually. Equity investment is suitable for this. Because the stock market has always ensured to give 15% returns in the long run despite the volatility in the stock market.
Rule of 72
This rule tells the time taken to double the money. Divide 72 by the potential return or interest rate and see. If you get a 15% return on investment in SIP, then to find the time taken to double it, you can divide 72 by 15, which will equal 4.8 years.
Rule of 114
This rule gives an account of the time taken to triple the amount. You can calculate this time by dividing 114 by the expected interest rate. For example, if the investment gives you a 15% return annually, divide 114 by 15, which equals 7.6 years.
Rule of 144
It takes your investment to a whole new level. This rule tells us about the time taken to quadruple the amount. Divide 144 by the expected ROI. With this example, you divide 144 by 15. This will give you 9.6 years. Yes, it will take 9.6 years to multiply your money by four.
100 minus age
This is about the allocation of assets. Subtract your age from 100. The number you will get will be the percentage that you should invest in the stock market. This rule is based on the fact that the younger you are, the higher your risk appetite. You will also be able to make up for the losses you will incur during this period.
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